Whenever I meet investors around the world, the most pressing question is: what happened to India? This was an economy that grew at nearly eight per cent for an entire decade (2003-2013). So much was expected from it. It was supposed to prove to the world that even a noisy, chaotic and populous democracy could deliver high growth. It was seen as the answer to China and its authoritarian economic model. Though everyone knew that India had certain institutional flaws, they were willing to cut it some slack in the hope that the country would succeed.
Given all the hope and hype, it’s not surprising that there is now so much disappointment with India. In meetings, I now have to defend our growth record and explain why five per cent growth is not the new normal for India. Eighteen months ago, we would use charts explaining how India was about eight or ten years behind China on most economic indicators, and thus was poised for an acceleration in demand across product categories. Today, however, most investors refuse to acknowledge India as a competitor to China. Any comparison is rubbished because we are seen as being incapable of execution.
To many investors, India does not seem to have a long-term strategic game plan, and the lurch towards populism is scary. Everyone is convinced that this is a largely self-inflicted problem. The great demographic dividend is seen by most as an upcoming demographic disaster, given India’s inability to provide skills training to its people or to create jobs. >> Read More